The Importance of Governance

Last Friday, I attended a talk on Charity Governance. It was very insightful and interesting. Whether you’re talking about the private sector or the public sector, governance is an issue that is absolutely critical to the success of an organization.

Why is Governance Important?

In the public sector, good governance is incredibly important, because a charitable organization is often entrusted with other people’s hard earned money. Donors expect that the organization will keep and use the funds in an efficient and effective manner. Accountability and transparency are essential when maintaining trustworthy relationships with stakeholders. Good governance is a primary way to showcase an organization’s level of accountability and transparency.

What is an Issue with Governance?

Maintaining good governance practices requires money and resources. While large organizations with a substantial amount of funding have the capacity for larger administration costs, smaller charities often do not. The dilemma that then arises is whether that organization should focus their limited funding on good governance or using that money toward its charitable programs. While the answer is murky and not clear cut, the bottom line is that good governance has been shown to improve the effectiveness of organizations and is extremely important for maintaining positive relationships with stakeholders.